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Equity Investment Guidelines |
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Developer Obligations & Guarantees |
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Debt Investment Guidelines |
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Equity Investment Guidelines
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APPLICANT REQUIREMENTS
Experienced developer with proven track record in the development of affordable housing. Developers with no affordable housing experience should have substantial multi-family development experience and bring in other team members (attorneys, accountants, management agents, etc.) with affordable housing experience.
NET WORTH REQUIREMENT
General Partner/Guarantor must have a minimum net worth of $2,000,000 (exceptions may be made for smaller deals or non-profit developers).
TYPE
Apartment complexes that qualify for low-income housing tax credits under Section 42 of the Internal Revenue Code. These complexes can be garden-style, mid-rise or high-rise.
PROPOSED PROJECT
Rehabilitation or new construction. Mixed-income and mixed-use properties in selected markets will be considered.
LOCATION
Urban, suburban or rural areas in any state of the United States.
TAX CREDIT AMOUNT
Minimum of $200,000 annually. No maximum (exceptions will be made for repeat developers).
TAX CREDIT PRICE
The Fund will purchase tax credits at prevailing competitive rates.
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Developer Obligations & Guarantees
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JHRA will look to the general partner for certain obligations, including:
DEVELOPMENT DEFICIENCY AND RENT-UP GUARANTEE
The general partner will guarantee the delivery of a completed, lien-free property, (including all final certificates of occupancy) in accordance with approved plans and specifications on or before an agreed completion date.
OPERATING DEFICIT GUARANTEE
The general partner will execute and deliver an Operating Deficit Guarantee Agreement, pursuant to which it will agree to loan to the Partnership which owns the property funds required to cover operating deficits. The specific terms of the Operating Deficit Guarantee are subject to negotiation.
LOSS OF TAX CREDITS
The general partner will be required to compensate JHRA for any loss of low-income housing tax credits due to recapture or non-compliance, but not for changes in the tax law. |
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Debt Investment Guidelines
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John Hancock Life Insurance Company USA (JHUSA) may provide forward-commitment, fixed-rate, non-recourse permanent first mortgage financing to qualified apartment properties in which JHRA has made an equity investment to purchase low-income housing tax credits.
LOAN AMOUNT
$1,000,000-$15,000,000 (Lesser amounts will be considered on a case by case basis.)
FORWARD COMMITMENT
12-24 months
TERM
17 years
AMORTIZATION
25 - 30 years
FIXED RATE
15-year interpolated Treasury plus spread subject to change based on market conditions and underwriting standards. Rate will be locked at loan application.
UNDERWRITING
1.20 minimum debt service coverage. 75% maximum loan-to-value based on market cap rate of stabilized net operating income.
FORWARD COMMITMENT FEE
3% payable at loan application. 1% refunded at loan closing. |
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Interested in more information or have specific questions? Contact us at any time.
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